CMPS Cheat Sheet 2026

The 30 highest-yield CMPS facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. When a client asks a CMPS about tax deductibility of mortgage interest, the planner should: → Explain general concepts and refer the client to a qualified tax professional
2. Why is it important to tailor loan options to a client’s financial goals? → To ensure alignment with the client’s objectives
3. How do rising interest rates most directly impact borrowers with an existing variable-rate HELOC? → Their monthly interest payments increase as the rate tied to Prime rises
4. When a borrower uses a cash-out refinance, how is the cash-out portion of the loan typically treated for income tax purposes? → It is not taxable because it represents borrowed funds, not income
5. A lender uses the combined loan-to-value (CLTV) ratio primarily to: → Assess total mortgage exposure relative to the property's value
6. A client is considering a reverse mortgage and appears to not fully understand the product. What is the ethical requirement before proceeding? → Require the client to complete HUD-approved reverse mortgage counseling
7. Which scenario represents a conflict of interest that must be disclosed to the client? → The planner's firm owns a share of the title company being recommended
8. A mortgage planner recommends a 15-year loan over a 30-year loan to an investor. The primary ROI benefit is: → Faster equity buildup reducing interest cost over time
9. Which client scenario would most benefit from an adjustable-rate mortgage (ARM) recommendation? → A client who plans to sell or refinance within 5-7 years
10. Which of the following is a requirement for a homeowner to be able to deduct the interest paid on a Home Equity Line of Credit (HELOC)? → The funds must be used to buy, build, or substantially improve the home securing the loan.
11. When investor demand for Mortgage-Backed Securities (MBS) increases, what is the likely impact on mortgage interest rates? → Interest rates will decrease.
12. What does the Appraiser Independence Requirements (AIR) policy, established after the housing crisis, primarily prohibit? → Loan production staff from selecting, retaining, or influencing appraisers
13. Which of the following describes a 'buy-down' mortgage strategy where the seller or builder pays to reduce the borrower's interest rate for the first two years? → 2-1 buydown
14. When calculating the available equity a homeowner can access, which formula is correct? → Available equity = (Appraised value × Max CLTV) – All outstanding mortgage balances
15. Under Regulation Z, the finance charge disclosure in a mortgage must be delivered to the borrower how many business days before consummation? → 3 business days
16. Under USDA Rural Development loan guidelines, which of the following borrower income rules applies? → Qualifying income cannot exceed 115% of the area median income
17. What is the primary function of the CFPB? → To protect consumers in the financial marketplace
18. Under the Truth in Lending Act (TILA), what is the primary ethical purpose of the Loan Estimate? → To give clients clear, standardized cost information before they commit to the loan
19. A real estate investor owns a residential rental property. Which of the following expenses related to this property is NOT typically tax-deductible? → The principal portion of the mortgage payments.
20. Which type of risk refers to the potential that changes in market interest rates will adversely affect the value of a client's mortgage or investment portfolio? → Interest rate risk
21. An investor's equity grows from $80,000 to $112,000 over three years. What is the approximate annualized return on equity? → 11.9%
22. Why is accurate client representation important? → It ensures responsible lending and regulatory compliance
23. Under what condition would an investor prefer an interest-only mortgage over a fully amortizing loan? → When maximizing short-term cash flow in a value-add strategy with a planned near-term sale
24. Which Medicare enrollment scenario would result in a late enrollment penalty? → Enrolling in Part B at age 67 after leaving employer coverage at age 65
25. Which economic indicator most directly measures construction activity in the new housing market? → Housing Starts
26. What is 'prepayment risk' in the context of mortgage-backed securities? → The risk that borrowers will pay off loans early, reducing expected interest income
27. What is considered a 'trigger term' in mortgage advertising? → Terms that require full disclosure under TILA
28. What is a key risk of ignoring ethical guidelines? → Loss of professional credibility and potential legal action
29. What is the primary purpose of Fannie Mae and Freddie Mac in the housing finance system? → To purchase mortgages and create mortgage-backed securities, providing liquidity
30. Which index is most commonly used as the benchmark for 5/1 adjustable-rate mortgages in the U.S.? → SOFR (Secured Overnight Financing Rate)